AHDB Pork Weekly Export Bulletin

AHDB Pork Weekly Export Bulletin - 9 February 2016

The Private Storage Aid (PSA) scheme operational for 3 weeks from 4 to 27 January took 89,941 tonnes of pork out of the market at a cost of €27.6m with Germany accounting for 26,000 tonnes, Spain 19,000 tonnes, Denmark 12,000 tonnes, the Netherlands 11,000 tonnes and 14 other Member States 22,000 tonnes. The PSA contributed to a small recovery of prices but did not cure the fundamental weaknesses of the EU pork market. In addition to the PSA, some 15 Member States have notified the Commission of their intention to use targeted aid from the €420m ‘solidarity package’ for the pork sector.

There is a glut of pork in Southern Europe with Spanish slaughterings considerably up and Portuguese pork normally destined to Angola and other destinations in surplus due to the fall of oil prices. The poor market conditions are affecting all cuts but is not really reflected in the official prices.

Netherlands

Poor prospectsRabobank and Topigs expect the number of sows in Holland to drop further to around 935,000 head in 2016. It stood at 1,010,000 sows in 2010. This would entail 58,000 fewer sows from closing farms and an additional 20,000 sows from expanding units, meaning a balance of 38,000 sows. Obviously, increasing productivity has meant stable production. Producers’ returns in the short term will remain in the red. (Source, Boerderij Vandaag)

Portugal

Pork madnessThis week, in a move supported by the Portuguese pork producers’ organisation, Sonae-Continente has reduced pork prices by 50%. The main competitor, Jerónimo Martins-Pingo Doce, is responding with ultra-low prices with pork shoulder joints retailing at €1.39 per kg!.According to Kantar World Panel, the average retail pork price in Portugal was €3.27 per kg over the last 52 weeks. These deep discounts are self-defeating and volumes sold are not increasing. (Source, own)

Portuguese pork production is under pressureWith countries such as Angola not buying meat at the moment due to the lack of cash, Portuguese pork exporters are now facing the full might of Spanish competition. Local producers are losing money and many may cease production this year. Producers protested at the doors of Pingo Doce supermarkets whom they accuse of buying Spanish pork more expensively than Portuguese pork. (Source, own)

Spain

Vall Canary expansionThe Group Vall Company continues to expand and has acquired a wholesale business in the Canaries. The company already trades in the Canaries through its Frimancha branch. (Source, Alimarket)

France

Association against social dumping in EuropeThe above association claims that German pig producers benefited with a €250 million advantage, thanks to their VAT system. The Association detailed the reasons behind their complaint to the European Commission on 2 February. The German VAT system results in an advantage estimated at €2 per pig. Michel Bloc’h, President of the Union of pig producers in Brittany (UGPVB) and President of the Association, said that French pig producers are technically performing but this discrepancy is simply unfair. In 2011, the Association sent a complaint to the Commission but this time they have the support of IFIP who prepared a stronger case against the German VAT system which firstly affects the financial interest of the Commission, secondly causes unfair competition and thirdly puts the German industry in a dominant position on the market.

€4 millionAccording to Patrick Stroza, local “Préfet” representing French state in the regions, €4m is the estimated value of losses resulting from demonstrations by French farmers in Brittany. Patrick Stroza also stressed that the evaluation has not yet been totally completed and, to put this amount in perspective, the emergency plan of support to French farmers amounts to €14 million which has been distributed since last October.

MarketsPork: A very small increase was reported last Monday for the base price (+€c0.2). However, it remains very low even though it is slightly higher than at the beginning of February last year 2015 (€1.086 per kg). In January, thanks to improved demand, prices increased by €c2.8.Piglets: In Brittany, prices increased by €c1per kg for 25kg weaners and by €c43 cents for 8kg piglets. FNP-Coop de France prices remained relatively stable, increasing by €c1 for 25kg weaners and €c24 for 8kg piglets.

Cuts: Since the increase in the German price, up €c6 at the beginning of January, operators are more competitive for exports. Nonetheless, exports to Italy remain difficult due to the low prices coming from Spain.

Germany

MarketsGerman meat market participants currently report low sales of pig meat and correspondingly increasing pressure on prices. Several cuts, including hams and necks are hard to sell even though offered amounts are relatively low. As a result, some slaughter facilities have increased the pressure on the pig price. However, on the other hand, pig numbers are moderate at best and can be sold easily and fast. Therefore, the recommended price for slaughter pigs remained unchanged once more at €1.31 per kg. (Source, AMI)

Hungary

Progress in ChinaWith 5 plants now listed for export to Mainland China: Gyulai, Pick, Kometa, Papa and Pini (all the largest pig plants in the country), shipments have risen from 11,000 tonnes in 2014 to 24,000 tonnes in 2015. (Source, Hungarian Farmers’ Association)

New abattoir for Gyulai?With a new export-driven optimism in the Hungarian pork sector, Gyulahús and the Gyula Municipality who co-own the plant want to invest in a new abattoir with a capacity of 20,000 pigs per week. This move is linked with the government wish to double pork production in Hungary from 3 to 6m by 2020. (Source, Global Meat News)

Orban meets PutinHungary has friendly relations and is pushing for a resumption of Hungarian pork exports to Russia. (Source, Global Meat News)

Russia

Largest pig farm in Europe in TumenAccording to the Regional Department of the Investment Policy and State Support, Siberian Agrarian Group is planning to build a pig complex that will become the largest in Europe. The cost of the project is RUB6.4b with capacity to produce 24,500 tonnes of pork annually. Construction should start in 2016. (Source, newsprom.ru)

Higher productionAccording to the Ministry of Agriculture of Russia, in 2015 pig production for slaughter totalled 3,969,800 tonnes (liveweight). At this level, it was 3.8% or 145,900 tonnes higher than in 2014. (Source, agro2b.ru)

Ukraine

Wholesale pork price updateDuring the last week of January, pork prices on the Ukrainian market increased marginally to UAH27.52 per kg (US$1.06 per kg) for first grade pork. Market sources report that efficient enterprises can only break even at this level, while less developed businesses are operating at a loss. (Source, pigua.info)

Belarus

Import banThe Department of the Veterinary and Food Surveillance of Belarus introduced temporary ban for import of pigs, pork and related products from two Russian oblasts from 2 February and products from the Crimea from 3 February. (Source, agronews.by)

Guatemala

Pig smugglingThe Pig Association of Guatemala (Apogua) has reported that around 2,500 pigs are being smuggled from Mexico each month. It is estimated to represent an annual loss of up to 115m Quetzals (€13.8m). (Source, Eurocarne)

Central America

Demand for pig meatThere is an increasing trend in pig meat consumption in the region, at the forefront of the trend is Costa Rica, where per capita consumption increased to 13kg in 2014. Between 2011 and 2014, consumption in El Salvador more than doubled to 3.5kg per person. In 2014, Honduras consumed 4kg per capita, 7kg in Guatemala and 2kg in Nicaragua. (Source, CentralAmericaData.com)

Mexico

Mexico imported 21% more pig meat in 2015According to the information of the Mexican Pig Farmers Federation, Porcimex, in 2015 Mexico imported 723,000 tonnes of pig meat, an increase of 21% compared with 2014. 45% of their pig meat requirement is imported. (Source, Eurocarne)

Colombia

US importsFrom the start of 2016, the USA is expected to export between 33,700 tonnes and 43,500 tonnes of pig meat to Colombia without duty. In addition, Colombia is expected to import around 46,000 tonnes of pork and pig meat by-products, in spite of the devaluation of their currency against the dollar. Colombia will allow Canada to import a quota of 5,750 tonnes at zero duties. On the other hand, Chile already sells without duty, and Mexico will be able to do it from 2018, as part of the agreements of the Pacific Alliance. (Source, El Colombiano)

Laos

Failed programmeA Lao government programme that provided loans to farmers to raise pigs in the run-up to the Southeast Asian Games, held in the country seven years ago, has bankrupted several farmers who have become mired in debt as pork prices have fallen, pushing a few to commit suicide. The government issued loans with 13% interest rates to farmers to increase pork production. About 140 pig farmers and their families who live in the capital Vientiane and in the central provinces of Vientiane and Bolikhamxay participated in the programme. (Source, Radio Free Asia)

China

Tight supplies in 2016China should produce some 640m pigs in 2016 at a price of 16.7 Yuan LW. This is down on 2015, when 668m pigs were slaughtered. It implies that demand for imported pork should remain strong. In December, the country imported a record 91,000 tonnes of fresh and frozen pork. Altogether, import prices have remained stable in 2015 despite the higher volumes. (Source, CNAgri)

New project for TrueinThe Truein Agro-Pastoral Group plans breeding farms for an output of 700,000 pigs per year near Anyang in Henan Province. The company and an unnamed partner are is investing £41m in the project. (Source, CNAgri)

Yurun’s difficultiesThe second largest Chinese pork processor, with 26,000 employees, may disinvest from some activities as it struggles with a mountain of debt. Some time ago, it experienced difficulties in repaying a £130m loan. Yurun posted losses of £60m. The company blamed high pork prices and a drop in demand of high-end food service. (Source, Global Meat News)

Inspection of imported porkUS exporters report that the Chinese do not now accept consignments with damaged boxes. In the past, they accepted damaged or crushed boxes as long as the content was not damaged. One container was also rejected as the certificate did not include the word 'Co' following the name of the company. (Source, Asian Pork)